India Boosts Startup Cash Flow: Expanded Credit Guarantee Scheme Unveiled

The Indian Government has enhanced the Credit Guarantee Scheme for Startups to facilitate easier access to funds, encouraging innovation and growth. The plan raises the credit ceiling and support for startups, aiming to invigorate domestic innovation and manufacturing as well as startup ecosystem engagement across 27 priority sectors.

In a strategic move to bolster the burgeoning startup ecosystem in India, the government has expanded the Credit Guarantee Scheme for Startups (CGSS), aimed at increasing capital investment for emerging enterprises. The Department for Promotion of Industry and Internal Trade (DPIIT) announced these changes, aligning with measures unveiled in the Union Budget 2025-26.

The expanded scheme intends to promote early-stage debt funding, fostering innovation across diverse economic sectors. It offers collateral-free debt opportunities through resources like working capital, term, and venture loans, aiming to sustain the momentum of the Startup India initiative introduced in 2016.

These modifications increase the guarantee ceiling per borrower from Rs. 10 crore to Rs. 20 crore and heighten the guarantee cover to 85% for loans up to Rs. 10 crore. Notably, the Annual Guarantee Fee for startups in 27 Champion Sectors is halved, supporting manufacturing and service enhancements under the 'Make in India' initiative. Despite pressing challenges, the scheme delineates a pathway for startups to navigate funding accessibility.

(With inputs from agencies.)